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Apr 5, 2011

Frack You! Part1

Do you know what Fracking is?Ok so Frack you!!

Well guess we got your attention a bit.

Folks this is a very important issue especially to those of you in Pennsylvania and New York state and really the entire USA

Fracking is technology that uses a lot of energy and time to extract gas that is caught in pockets in the ground and not easily recovered

Fracking is what is supposed to help greatly free America from foreign sources of power. BUT fracking has been shown to have large possible residual affects to the environment and human consumption of water and food.

When Victoria Switzer awoke on a cold night in March, her dog was staring out the window at the flame roaring from a natural-gas-drilling rig 2,000 feet behind her house. She remembers trees silhouetted in a demonic dance as the plume burned off gas that had been building up under her land.

She discovered later that such flaring can occur when Cabot Oil and Gas Corp. and dozens more companies drill for gas trapped in shale rock. The deposits, stretching from Texas to New York, and as far away as Australia and China, represent what may be the biggest energy bonanza in decades -- one that Switzer, 57, recalls thinking the Earth isn’t surrendering without a fight, Bloomberg Markets reports in its July issue.

Switzer, a retired teacher in Pennsylvania, is on the front line of a shale gas rush that’s dividing communities, creating millionaires and shaking up global energy markets.

Companies from India’s Reliance Industries Ltd. to Japan’s Mitsui and Co. are spending billions of dollars to dislodge natural gas from a band of Pennsylvania shale -- sedimentary rock composed of mud, quartz and calcite.

Shale gas proponents, led by 91-year-old oil patch billionaire George Mitchell, who invented the process to extract it, say the U.S. should plumb all forms of natural gas. That would help unhook the nation from coal and foreign petroleum.

Gas is about two-thirds cheaper than oil and greener too. It produces 117 pounds (53 kilograms) of carbon dioxide per million British thermal units (MMBtu) of energy equivalent compared with 156 for gasoline and 205 for coal.

‘De-OPEC-ize’
“This discovery will change the course of world history, not just to de-carbonize the economy but to de-OPEC-ize it,” Chesapeake Energy Corp. Chief Executive Officer Aubrey McClendon said in December in Copenhagen as the United Nations climate conference was under way.
Chesapeake, based in Oklahoma City, has profited by selling drilling rights and gas reserves for $10.7 billion during the past 2 1/2 years, quadruple the $2.7 billion it paid. McClendon -- with $33 billion in assets left to sell -- says he’s open for business.

Shale gas has plenty of detractors. Environmentalists say fracking, a process in which drillers blast water into a well to shatter rock and unleash the gas, threatens pristine watersheds. Dish, a hamlet of 180 residents north of Fort Worth, Texas, has almost as many wells, compressors and pipelines as people.

‘Children, Old People’
Last year, the Texas Commission on Environmental Quality found benzene, which it classifies as a carcinogen, at 10,700 times the safe long-term exposure limit next to a well 6 miles (10 kilometers) west of town on which a valve had been left open.
“We have children, old people, pregnant women,” Mayor Calvin Tillman says. “They’re not supposed to be subjected to toxins.”

Switzer, who moved to Dimock Township, Pennsylvania, to build a $350,000 dream home with her husband, Jimmy, in 2004, had no idea how shale gas would consume her village of 1,400.
She says she found so much methane in her well that her water bubbled like Alka-Seltzer. Neighbor Norma Fiorentino says methane in her well blew an 8-inch-thick (20-centimeter-thick) concrete slab off the top. The $180 bonus Cabot paid to drill on Switzer’s 7.2 acres (2.9 hectares) and the $900 in royalties she gets each month don’t compensate, she says.

‘Beads and Baubles’
“I feel like one of the Indians who sold Manhattan for beads and baubles,” she says.
The economics of shale don’t look great right now for big companies either. Natural gas prices plunged to $2.41 per MMBtu in September 2009 from $13.69 in July 2008 as the recession cut demand while drilling accelerated. On May 24, gas traded at $4.04.

James Barrow, who invests one-ninth of his $50 billion portfolio in energy stocks as president of Dallas-based Barrow Hanley Mewhinney and Strauss, says leases signed as gas peaked in 2008 make drilling necessary -- even in a slump. When this new gas hits the market, the price could again sink into the mid-$2 range, he says.

For companies to profit from new wells, gas has to rise to $7.50, says Ben Dell, a Sanford C. Bernstein and Co. analyst in New York. He predicts it’s only a matter of time before firms trim production, which he says will boost gas to $8.50 by 2011.

That would help meet rising power demand. Global energy consumption will soar 44 percent by 2030 from 2006, the U.S. Energy Department says. China and India will siphon off 28 percent by then, according to the DOE forecast. Demand is rising because the planet’s population will balloon to 8.2 billion in 2030 from 6.8 billion today.
Hydroelectric, wind and other renewable sources will plug only part of the gap: They’ll contribute 17 percent of U.S. electricity generation by 2035 from 9.1 percent in 2009, the DOE says.

“Taking advantage of the new natural gas finds, the shale finds, would be an important piece of how we begin to break our dependence on foreign oil,” Carol Browner, President Barack Obama’s senior energy adviser, told a Washington audience in April.

Investors Primed
Investors are primed for a boom. Chesapeake’s shares fell 47 percent from the beginning of 2008 to $20.75 on May 24 as gas prices sank. Bernstein’s Dell predicted in mid-May that shares would rise to $34 during the next 12 months while companies curb output, reducing supply as rebounding economies demand more energy.
The stock prices of Chesapeake and fellow gas developers Petrohawk Energy Corp. and Range Resources Corp. don’t reflect the firms’ shale holdings, says David Heikkinen, a Tudor Pickering Holt and Co. analyst in Houston.
Fort Worth-based Range has assets valued at $65 a share, he says, a third more than its May 24 stock price of $42.47.
Range began plumbing the Marcellus shale that underlies New York, Pennsylvania and West Virginia in 2004. The band of rock -- so designated because it pokes through the surface near a city of that name in northern New York -- may contain 262 trillion cubic feet of recoverable gas, the DOE estimates. The U.S. uses 20 TCF annually, mostly for power plants and home heating.
That means the Marcellus shale alone could supply America’s needs for more than a decade.

Getting a Bargain
Range CEO John Pinkerton says he got a bargain when his company paid $1,000 an acre for Marcellus drilling rights near Pittsburgh starting in 2004. India’s Reliance paid 14 times more in April, a price Pinkerton says he wouldn’t consider.
“If I sold today for $14,000 an acre, I’d be selling for a quarter of what it’s worth,” Pinkerton told investors in April.
Range has 200 wells in Washington County south of Pittsburgh and may add another 4,300 in the county over 10 years.

Even oil and coal companies are raising their bets on gas. In December, Exxon Mobil Corp. agreed to pay $41 billion in stock and assumed debt for Fort Worth-based XTO Energy Inc., the biggest U.S. gas producer.
Outside North America, unexplored geology and nonexistent pipelines make it harder to gauge how much shale gas exists.

“Regions including China, India, Australia and Europe are thought to hold large resources,” the International Energy Agency said in November.

Liking the Odds
Firms are taking those odds. European oil giants BP Plc and Royal Dutch Shell Plc are looking in China. Chevron Corp., ConocoPhillips and Exxon purchased drilling licenses in Poland.
“Companies are rushing to get the last available license,” says Henryk Jacek Jezierski, Poland’s chief national geologist.
Consol Energy Inc., the second-largest U.S. coal producer by market value, owns land near Pittsburgh that’s in the heart of Marcellus shale. It also bought shale assets valued at $4.4 billion in April. CEO Brett Harvey says coal will remain the bedrock of the U.S. economy far into the future. He’s not ignoring gas.
Because Consol already owns the Pittsburgh-area property, it can charge as little as $3.71 MMBtu for gas and still earn a 20 percent after-tax return, he says. Firms forced to pay $5,000 an acre for drilling rights and a 20 percent leasing royalty would have to charge $5.18, he says.
“If there’s a flood of gas at $4, guess who’s going to produce it?” Harvey says. “We are.”